Diamonds - A Trade Commodity?

[kenny]

How would you define a Trade Commodity?

If diamonds are not a trade commodity today what would cause them to become one?

What would be the effect, falling prices, a shake out of sellers, evaporation of mystique?

 

[oldminer]

Diamonds miss some important aspects of true commodities. Possibly, someday synthetic diamonds could be a commodity, but not the natural ones.

Every diamond is somewhat unique. Commoditization depends on complete reliance on repeatable product, not just similar product. To the extent that small diamonds are reasonaly repeatable and replaceable with similar diamonds they have been commoditized, but not diamonds of meaningful size, such as 0.10ct and larger.

Demand for diamonds arises from marketing where most commodities depend on necessity. This may be an unusual situation for a commodity. I am not economist, but the rules of diamond value and demand are not hard wired into human needs. Its a business of selling romance, art, and quasi-investments. It isn''t like oil, wheat, orange juice..............Diamonds may have aspects of a commodity, but they are not defined by the limitationf of other things that are commodities.

 

[kenny]

Thanks David.
My dictionary defind commodity as any unprocessed or partially processed good, as a grain, fruit or precious metal.

Doesn't sound anything like a diamond to me, maybe rough, but not cut stones.

Why do I keep reading about the concern of diamonds becoming a commodity on Pricescope?
What is the concern all about?
Why does this concern come up again and again?

There is some big story here that I am oblivious to.

 

[Garry H (Cut Nut)]

http://www.idexonline.com/ go to diamond prices and then to drivers - this makes it look like diamonds are a tradeable commmodity.

But gold is a tradeable commodity - it has a standard - 99.99% or four nines.

The closest equivalent for diamond is 1cvt D IF, and that is a can of worms.

Gold is a commodity only after it is refined from the rough dug out of ground stuff, yet it also gets fashioned into jewellery and you can pay 20 times more at Tiffany for this commodity.

 

[JohnQuixote]

Date: 9/19/2005 5:09:19 PM
Author: kenny
Thanks David.
My dictionary defind commodity as any unprocessed or partially processed good, as a grain, fruit or precious metal.

Doesn't sound anything like a diamond to me.

Why do I keep reading about the concern of diamonds becoming a commodity on Pricescope?
What is the concern all about?
Why does this concern come up again and again?

There is some big story here that I am oblivious to.

The reduction of a diamond to a mere set of numbers. That is the concern.

Diamond cutters were long considered craftsmen and artists (the best still are), as were blacksmiths. As technology has moved forward, 'smiths have been replaced with automated manufacture. In many cutting factories automation has given a 'sense' of manufacture, but not everywhere. The unchanging difference is that producing a diamond, especially larger than melee, will never be like stamping out automobiles where every piece and part is interchangeable.

Each piece of diamond rough took millions of years to form. Once taken from the earth each piece must be carefully analyzed. A different plan must be developed to arrive at the shape, size and beauty that will be yielded from within. No two diamonds are perfectly alike. Yes, there are ways to compare them in terms of performance, especially rounds, but color, clarity and even cut differ from piece to finished piece. There are subdivisions within each color grade. There are microscopic elements of crystallization within each diamond that do not appear on a plot. There are aspects to the way the diamond was run on the wheel and took a polish that blend together to create its distinctiveness when finally viewed.

The cut of a diamond has the largest influence on its overall light return - and light return can be expressed in differing terms with proportions, cut estimators, 3D scans, natural reflectors and machines like imagem/brilliancescope... But numbers will never tell the whole story about the diamond's birth, its crystallization over millenia and the blending together of a myriad of distinctive elements WITHIN the numbers that make it one-of-a-kind.

The concern is that by reducing a diamond to numbers we take away its romance. We take away distinctiveness that can be measured only by the human eye and appreciative human mind. When taken too far it is a valid concern. A healthy marriage of numbers assessment with direct performance assessment and traditional true human observation is key if want to keep diamonds from becoming commoditized.

This is why some of us on PS are moderates when it comes to numbers and scans. Yes, they are powerful tools for broad communication and analysis. Diamonds falling within a range of proven numbers are recommendable, since we understand light return from a 'volume' standpoint - but nuances of any specific diamond's particular appeal depend on human taste and preference. When making such fine judgments - beauty can only be in the eyes of the beholder.

 

[belle]

very nice sir john. well said.